The vast majority of property buyers across Melbourne headed to affordable fringe suburbs in 2018, new figures show, but apartment buyers continued, overwhelmingly, to flock to the city centre.
Melbourne’s central business district notched the highest number of property sales in the year to the end of October, a Domain Group analysis of sales data has found, with 1340 apartments and 34 houses finding new owners.
Pakenham in Melbourne’s south-east and Point Cook in Melbourne’s west recorded 1158 sales and 1000 sales respectively, followed by Craigieburn (954), Werribee (908) and Frankston (894).
Whether a suburb made the list was heavily influenced by its pace of development and population growth, said Domain Group senior research analyst Dr Nicola Powell. Other suburbs in the ranking are geographically large, such as Reservoir and Frankston.
“Some of these areas are some of the fastest growing suburbs not only in Melbourne but in all of Australia,” Dr Powell said.
Source: Domain Group *Suburbs must have minimum 50 sales over 12 months
Sales were also higher in the suburbs within Melbourne’s designated growth corridors, such as Pakenham, Point Cook, Sunbury, Craigieburn, Werribee and Tarneit.
“And a lot of these areas are on the outer periphery of Melbourne, so they have had high levels of development,” Dr Powell said, adding that new housing estates were selling in these suburbs.
Sales in the CBD, which also takes in a stretch of St Kilda Road, slowed in the second half of the year, observed Ryan Pagan, director at Pagan Real Estate.
“The 3000 postcode has the most available listings,” Mr Pagan said. “Some of the buildings have 600 apartments in them, and there are 20 of them in the city.”
The apartments that attracted strong demand and sold well generally had at least two bedrooms, two bathrooms, a car park and a nice view, he said.
But it was a different story for small, low-grade investor stock, such as units that had bedrooms with no natural light or looked out on a concrete wall.
With many investors squeezed out of the market as banks become stricter about approving home loans, Mr Pagan said apartments were frequently selling to young professionals working in the city, or people looking to set up short-stay accommodation.
Unit prices had taken a hit this year, he said and he did not anticipate a dramatic improvement in the market in the first half of next year. “I don’t expect a lot of capital growth for people who own apartments,” he said.
Meanwhile, in Pakenham, 60 kilometres south-east of the city, Harcourts director Tain Bartholomew said that properties were taking longer to sell than they were a year ago.
“It has slowed up a little bit,” he said, estimating that prices had fallen between 8 and 12 per cent.
“But it’s still so affordable here; you can pick up a three-bedroom, two-bathroom house in your mid-to-low $400,000s.”
Most properties were selling to first-home buyers, second-home buyers or first-time investors, Mr Bartholomew said. There was also a strong demand for small acreages, he added, with land selling very quickly.
As an election looms and the financial services royal commission is due to hand down its final report early next year, Mr Bartholomew said it was difficult to predict how the local property market would fare in 2019.
Resource from Domain